Mr. Aigars Freimanis, Director and Member of the Board of Directors of the JSIC “Seesam Latvia”, believes that the decline in the Latvian non-life insurance market is over.
According to the results of "Seesam Latvia" of recent months, the demand for non-life insurance has begun to grow almost in all types of insurance. The highest activity has been observed in the segment of corporate clients. Since the beginning of this year, the prices of insurance services in the types of insurance which were previously unprofitable, namely, in the motor vehicle property insurance (KASKO) and mandatory insurance of civil liability of owners of vehicles (MTPL), have grown approximately by 5-10%.
In the 2nd quarter of 2011, the number of insurance contracts concluded by "Seesam Latvia" increased by 15%, and the volume of gross written premiums grew by 39.3%. For comparison - in the 1st quarter of 2011, the volume of gross premiums fell by 7.4%. This trend of decline was mainly associated with a lower insurance price base, compared with the corresponding period of the previous year.
During the first six months of 2011, the volume of written premiums of "Seesam Latvia" rose by 9.2% to 4.4 million LVL, while the number of insurance contracts in general increased by 3.5%.
We are very pleased with the results of the first half of 2011, as growth in the number of insurance contracts suggests that customers appreciate the work of our team.
However, despite the growth in volume of gross written premiums and number of insurance contracts, services of insurance provided by "Seesam Latvia" in the first half of 2011 brought a loss in amount of 260 000 LVL. For comparison - in the first half of 2010 the insurance services provided by the company resulted in a profit of LVL 292 000.
The loss of "Seesam Latvia" from insurance services in the first half of 2011 has been associated with the increase of net claims incurred by 12%. The growth of net claims incurred is primarily related to the big damages caused by the very snowy winter, as well as a number of insurance cases concerning large damage amounts, claims for which were submitted in the first half of 2011. Among these cases there was also a MTPL claim in Germany in the amount of one million euros. In addition, the total damage in amount of 300 000 LVL was claimed in connection with the collapse of building structures of two industrial buildings because of excessive snow loads. Because of the snow and slippery roads there were more traffic accidents this winter, so "Seesam Latvia" received more MTPL insurance claims: in the first half of 2011 "Seesam Latvia" paid 853 000 LVL in gross claims paid, but the gross written premiums amounted to 836 000 LVL.
Given the fact that in recent years the demand for insurance services has stabilized, and the prices of non-profitable insurance services are changing, this year the non-life insurance industry in Latvia might achieve a growth of gross written premiums by 5% to 10%, thus returning to gaining profit already in 2012. In turn, the JSIC "Seesam Latvia" plans to finish 2011 with a growth of gross written premiums by 15%.
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